Landstar System Reports 11 Percent Increase in Diluted Earnings Per Share to a Third Quarter Record of $0.71

Oct 25, 2012, 07:50 ET from Landstar System, Inc.

JACKSONVILLE, Fla., Oct. 25, 2012 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported 2012 record third quarter diluted earnings per share of $0.71 from net income of $33.1 million, compared to net income of $30.2 million, or $0.64 per diluted share, for the 2011 third quarter.  Operating margin, representing operating income divided by gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) was 48.1 percent in the 2012 third quarter compared to 44.7 percent in the 2011 third quarter.  Revenue for the 2012 third quarter was $717.2 million compared to $684.0 million in the 2011 third quarter. 

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2012 third quarter was $663.5 million, or 93 percent of revenue, compared to $625.8 million, or 91 percent of revenue, in the 2011 third quarter.  Revenue hauled by rail, air and ocean cargo carriers was $38.9 million, or five percent of revenue, in the 2012 third quarter compared to $44.5 million, or seven percent of revenue, in the 2011 third quarter. 

Trailing twelve-month return on average shareholder's equity was 39 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 29 percent.  Landstar also announced that its Board of Directors has declared a quarterly dividend of $0.06 per share.  The dividend is payable on December 7, 2012 to stockholders of record at the close of business on November 13, 2012.  During the 2012 third quarter, Landstar purchased 183,800 shares of its common stock at a total cost of $8.8 million bringing the total number of shares purchased during the first three quarters of 2012 to 499,400 at an aggregate cost of $24.6 million.  Currently, there are 2,017,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase programs. 

"Landstar produced solid operating results in the 2012 third quarter, despite inconsistent demand and a tougher quarter over prior year quarter revenue per load comparison," said Landstar Chairman, President and Chief Executive Officer Henry Gerkens.  "Loads hauled via truck capacity in the 2012 third quarter increased a healthy seven percent over the 2011 third quarter.  Average truck revenue per load in the 2012 third quarter remained relatively high at $1,756 per load compared to historical amounts but was slightly lower than the $1,768 revenue per load amount in the 2011 third quarter.  After amounts paid for purchased transportation and agent commissions were deducted from revenue in the 2012 third quarter, the resulting gross profit amount was the second highest third quarter gross profit amount in Landstar history.  Landstar continued to demonstrate its operating leverage as it passed the increase in gross profit through to operating income, resulting in an operating margin of 48.1 percent in the 2012 third quarter.  Third quarter 2012 diluted earnings per share of $0.71 was a third quarter record."

Gerkens continued, "As I look at the 2012 fourth quarter, it is important to note that the 2012 fourth quarter is a thirteen week quarter whereas the 2011 fourth quarter was a fourteen week quarter.  I estimate that the extra week in the 2011 fourth quarter contributed approximately $25 to $30 million in additional revenue.  Using the 2011 fourth quarter gross profit margin of 15.8 percent, the increase in diluted earnings per share attributable to that additional revenue is estimated to be approximately $0.06 per diluted share.  In addition, the 2011 fourth quarter included a favorable income tax benefit of approximately $0.03 per diluted share. 

Although I am very confident in the long term outlook for Landstar, I am also somewhat cautious in the short term.  I believe that until the uncertainty surrounding the current political environment and tax and budgetary issues are resolved, the economy will continue to grow, but at a sluggish pace.  In the first few weeks of the 2012 fourth quarter, we have seen a slowing in demand beyond the choppiness experienced during the 2012 third quarter. Despite the slowing demand, revenue in the first several weeks of the 2012 fourth quarter continues to run above revenue of the first several weeks of the 2011 fourth quarter.  Given the uncertain economic environment and current revenue trends, I anticipate earnings per diluted share for the 2012 fourth quarter to be in a range of $0.63 to $0.68 per share."

Landstar will hold a live webcast of its quarterly earnings conference call this afternoon at 2:00 pm ET.  To access the webcast, visit the Company's website at www.landstar.com; click on "Investor Relations" and "Webcasts," then click on "Landstar's Third Quarter 2012 Earnings Release Conference Call."  The webcast will be available on the Company's website through Thursday, November 1, 2012.

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995.  Statements contained in this press release that are not based on historical facts are "forward-looking statements".  This press release contains forward-looking statements, such as statements which relate to Landstar's business objectives, plans, strategies, expectations and intentions.  Terms such as "anticipates," "believes," "estimates," "intention," "plans," "predicts," "may," "should," "will," the negative thereof and similar expressions are intended to identify forward-looking statements.  Such statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or workers' compensation claims; unfavorable development of existing claims; dependence on independent sales agents; dependence on third-party capacity providers; disruptions or failures in our computer systems; a downturn in domestic or international economic growth or growth in the transportation sector; substantial industry competition; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2011 fiscal year, described in Item 1A Risk Factors, and in other SEC filings from time-to-time.  These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated.  Investors should not place undue reliance on such forward-looking statements, and Landstar undertakes no obligation to publicly update or revise any forward-looking statements.

About Landstar: Landstar System, Inc. is a non-asset based provider of integrated supply chain solutions.  Landstar delivers safe, specialized transportation and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees.  All Landstar transportation services companies are certified to ISO 9001:2008 quality management system standards and RC14001:2008 environmental, health, safety and security management system standards.  Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

 

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 29,

September 24,

September 29,

September 24,

2012

2011

2012

2011

Revenue

$        2,102,164

$         1,931,560

$          717,168

$       684,013

Investment income

1,185

1,294

393

373

Costs and expenses:

Purchased transportation

1,603,865

1,459,660

548,162

518,300

Commissions to agents

162,728

153,165

56,036

54,990

Other operating costs

17,635

22,050

6,447

6,427

Insurance and claims

28,411

34,096

8,010

9,381

Selling, general and administrative

113,916

112,252

37,455

39,206

Depreciation and amortization

20,476

19,336

7,072

6,549

Total costs and expenses

1,947,031

1,800,559

663,182

634,853

Operating income

156,318

132,295

54,379

49,533

Interest and debt expense

2,312

2,340

818

735

Income before income taxes

154,006

129,955

53,561

48,798

Income taxes 

58,203

49,642

20,460

18,640

Net income

95,803

80,313

33,101

30,158

Less: Net loss attributable to noncontrolling interest

-

(62)

-

-

Net income attributable to Landstar System,

Inc. and subsidiary

$            95,803

$             80,375

$           33,101

$         30,158

Earnings per common share attributable to

Landstar System, Inc. and subsidiary

$                2.05

$                 1.69

$               0.71

$             0.64

Diluted earnings per share attributable to 

Landstar System, Inc. and subsidiary

$                2.04

$                 1.68

$               0.71

$             0.64

Average number of shares outstanding:

Earnings per common share  

46,775,000

47,670,000

46,614,000

47,358,000

Diluted earnings per share

46,964,000

47,735,000

46,732,000

47,387,000

Dividends paid per common share

$              0.170

$               0.155

$             0.060

$           0.055

 

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

Sept. 29,

Dec. 31,

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$        79,961

$        80,900

Short-term investments

38,112

27,944

Trade accounts receivable, less allowance

of $8,299 and $6,591

429,684

368,377

Other receivables, including advances to independent

contractors, less allowance of $4,951 and $5,384

51,766

53,263

Deferred income taxes and other current assets

20,202

21,308

Total current assets

619,725

551,792

Operating property, less accumulated depreciation

and amortization of $154,657 and $145,804

163,569

142,146

Goodwill

57,470

57,470

Other assets

68,618

57,041

Total assets

$      909,382

$      808,449

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Cash overdraft

$        26,719

$        25,905

Accounts payable

212,653

163,307

Current maturities of long-term debt

19,366

17,212

Insurance claims

68,410

76,624

Other current liabilities

45,526

48,065

Total current liabilities

372,674

331,113

Long-term debt, excluding current maturities

99,748

115,130

Insurance claims

25,386

27,494

Deferred income taxes and other non-current liabilities

40,141

34,135

Shareholders' equity:

Common stock, $0.01 par value, authorized 160,000,000 

shares, issued 66,855,922 and 66,602,486 shares

669

666

Additional paid-in capital

172,455

165,712

Retained earnings

1,035,003

947,156

Cost of 20,386,462 and 19,882,289 shares of common

stock in treasury

(838,273)

(813,684)

Accumulated other comprehensive income

1,579

727

Total shareholders' equity

371,433

300,577

Total liabilities and shareholders' equity 

$      909,382

$      808,449

 

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 29,

September 24,

September 29,

September 24,

2012

2011

2012

2011

Revenue generated through (in thousands):

Business Capacity Owners (1)

$  1,057,109

$  1,020,856

$     355,861

$      351,108

Truck Brokerage Carriers

886,532

747,122

307,600

274,731

Rail intermodal

55,002

53,991

18,782

19,159

Ocean and air cargo carriers

60,227

68,261

20,100

25,330

Other (2)   

43,294

41,330

14,825

13,685

$  2,102,164

$  1,931,560

$     717,168

$      684,013

Number of loads:

Business Capacity Owners (1)

616,200

601,990

201,050

199,260

Truck Brokerage Carriers

510,360

441,930

176,760

154,720

Rail intermodal

22,290

22,750

7,470

7,920

Ocean and air cargo carriers

11,760

12,150

3,850

4,200

1,160,610

1,078,820

389,130

366,100

Revenue per load:

Business Capacity Owners (1)

$          1,716

$          1,696

$         1,770

$          1,762

Truck Brokerage Carriers

1,737

1,691

1,740

1,776

Rail intermodal

2,468

2,373

2,514

2,419

Ocean and air cargo carriers

5,121

5,618

5,221

6,031

September 29,

September 24,

2012

2011

Truck Capacity Providers

Business Capacity Owners (1) (3)

8,074

7,798

Truck Brokerage Carriers:

     Approved and active (4)

20,474

18,402

     Approved

9,315

9,088

29,789

27,490

Total available truck capacity providers

37,863

35,288

(1) Business Capacity Owners are independent contractors who provide truck capacity to the Company under exclusive 

lease arrangements.

(2) Includes premium revenue generated by the insurance segment and warehousing and transportation management fee revenue

generated by the transportation logistics segment.

(3) Trucks provided by Business Capacity Owners were 8,596 and 8,314 at September 29, 2012 and September 24, 2011, respectively.

(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.

SOURCE Landstar System, Inc.



RELATED LINKS

http://www.landstar.com